Definition
A minimum funding round size (typically $1-2 million) that triggers the automatic conversion of SAFEs or convertible notes into equity. It's the threshold that separates real funding rounds from friends-and-family pocket change.
Example Usage
Our convertible notes specified a $1 million qualified financing, so when we raised $1.5 million, all the notes automatically converted.
Origin
Emerged with convertible note and SAFE structures in the 2000s-2010s.
Fun Fact
The qualified financing threshold prevents seed notes from converting during tiny bridge rounds, ensuring they convert only when there's a proper price-setting round with institutional investors.
Source: Convertible security documentation standards
Related Terms
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